Thursday, February 12, 2009

Thursday Mid-Day Charts Update



Not a lot of time to comment here, but these two charts represent the price action so far today, Thursday. The most bearish interpretation is on the chart directly above, which suggests and 3rd Wave hard down is coming as soon as this small rally up from today's lows is over. Note how prices dropped below wedge support on the Open and have worked back up toward the bottom of the wedge in the past few hours.



Above is a zoom out of the wedge chart, prices gapped down out of the wedge and have rallied back up to test the bottom support line, now working as resistance. To simplify things, if prices work their way back into the wedge pattern, Bullish. If prices reverse lower, bouncing down off of the wedge pattern, Mega-Bearish.

Best of luck to all.


A

11 comments:

Anonymous said...

bought some NNVC at 73 cents today

Anonymous said...

allan do you run a hedge fund ?

Anonymous said...

EW stuff aside, it's as simple as observing that we're breaking out to the downside of a continuation triangle (bad) while a positive MACD divergence fails (very bad). I had increased my longs last week but I put some shorts back on the table today during this afternoon's rally.

Anonymous said...

and just as I write this, the market rallys back up above support levels.

Anonymous said...

Can the EW fight PPT? what a waste of day

Allan said...

Re: Hedge Fund

Yes, but I don't promote or talk about it here. Send me an email: apharris@mac.com

Re: Volatility Yes, but they don't promote it or talk about it on VNBC. Send the PPT an email: OCIP@do.treas.gov

mlomker said...

Whether the day was a waste depends upon whether or not you exited. I exited half my position 1 S&P point above the low...it isn't that hard to figure out with good EW software.

The rally at the close was interesting. I don't believe in PPT, so more likely a combination of short covering and "bull panic." This kind of volatility is normal before really big moves...and breaking a triangle and then going back up to 'kiss' it is very bearish.

In other words, it looks like a lovely opportunity to re-short my half position.

Anonymous said...

I think the Plunge Protection Team is active and that is one of the reasons we see these recoveries late in the day.

It is sort of the way the central banks lean against the wind in the currency market. The markets eventually get where they want to go, but it takes a lot of time to get there; it is unwise to sell weakness or breaks of support and it is unreasonable to expect a collapse. Uncle Sam is always buying way below the market, and he has a lot of cash.

Likely, we'll just continue to slowly ratchet lower. Uncle Sam is doing the same thing with the economy. Instead of a 9 month recession, we are going to end up with a 3 or 4 year malaise because of all this intervention.

It is no longer a free market, making it difficult for a trend trader to trade.

It looks like an impluse wave down from the 875 high to the 808 low. I'm guessing that we are in 2 of 3 of 5.

I see resistance at 849 to 852. That should stop this advance.

Alternative 1: If we get above that, we need to start thinking primary 5 never really did begin, primary 3 ended at 741 and we are still chopping around in a sideways correction of primary 4.

Alex

David said...

I agree this kind of volatility is common before big moves and am for now not expecting this to turn into a rally. After the monster Columbus Day rally I was questioning whether I should go short again and then I was brought back to reality after reading on this blog "A 1000 point rally is not a sign of a healthy market".

Sharp intraday turnarounds have been the norm but they don't always signal a change in trend. Look at Nov 13. The Dow was down 400 pts on Nov 12 and was down over 300 on Nov 13 before reversing and closing up 500 pts for the day. An 800 point upside move in one afternoon, but hardly a sign of good things to come. Some stregth carried over into the following morning and from then on the Dow fell approx 1400 pts in the next 5 trading days.

Mike said...

Alex,

Definately agree with the Plunge Protection Team theory...

DJIA was in a free fall at -241 for the day....prompting them to hit the "Send" button on the Reuters press release.

Just a flash in the pan.

Too flashy for me. Things will cripple more.

-Mike

mlomker said...

"I see resistance at 849 to 852. That should stop this advance."

The 15 min stoch is pegged. My guess is this is just an over-exuberant A-wave and we'll quickly back off in B. I'd be surprised if the market takes out the hourly chart 50-day near 842.

No arguments about the Japanification of our 'recovery'. K-wave doesn't support a real bull market until 2012 so you might be right.